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What affects the Bitcoin price?
Bitcoin is ultra-volatile in its nature. It means that the BTC price may bring traders and investors many surprises. In 2017, for example, the Bitcoin surged by more than 220 per cent and reached almost $20,000. In the opposite direction, the price of Bitcoin slid sharply down during the so-called “Crypto Winter” of 2018, when it lost more than 60 per cent, sinking to a $3,000 level.
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Major BTC price drivers
Bitcoin price complies with the law of supply and demand. Bitcoin supply is sometimes compared to gold, as there are a limited number of Bitcoins (the same as the quantity of gold) that can be mined – 21 million. The demand side here works the same as with any other asset: the more investors are willing to enter the Bitcoin market, the higher Bitcoin price.
Media is the most important weapon and source of influence on the price of Bitcoin and other cryptocurrencies. Greater awareness boosts people’s understanding and drives investors’ interest. With the news spreading like wildfire, the BTC price can be significantly hit by the mass effect of some important media news. Always keep abreast of the latest Bitcoin news to catch the best trading opportunities.
Political events can also drive the Bitcoin price in either direction. Generally, the change in BTC price is opposite to what happens to fiat currencies. Instability of central bank currencies makes people more interested in alternatives, such as Bitcoin and its peers. Bitcoin, keeping the leading place on the cryptocurrency market, becomes the crypto of choice for numerous investors.
Bitcoin and cryptocurrencies are still considered new concepts, difficult for governments to absorb. Many countries are still changing cryptocurrency regulation on a regular basis. Although Bitcoin is independent and decentralised in its core, regulations may affect investors in cryptocurrencies. Therefore, government decisions, such as closing crypto trading platforms or vice versa, adopting crypto at a state level, may cause a Bitcoin price change.
Bitcoin price instability may also be affected by the Bitcoin community in its effort to reach consensus regarding Bitcoin future development. The decisions influence the Bitcoin blockchain and the entire Bitcoin ecosystem. Lack of consensus leads to a hard fork, which is a separation of Bitcoin into two separate blocks, each following different rules. This is how Bitcoin Cash was created.
Started in 2009, Bitcoin is the world's first decentralised cryptocurrency. Invented by an individual or a group using pseudonym Satoshi Nakamoto, Bitcoin shaped the cryptocurrency market and paved the way for other crypto platforms.
The first decentralised digital payment system in the world, Bitcoin is powered by blockchain technology. There is a finite number of Bitcoins that can ever be mined - 21 million. This number is hard-coded into the system. Today, miners produce a new block every 10 minutes and get 6.25 Bitcoin as a reward.
Bitcoin is the leading cryptocurrency in terms of market capitalisation and the most expensive one. The current Bitcoin price hovers around $9,200. Analysts consider 2020 to be an important year for Bitcoin and make positive forecasts regarding its future price. As of June 2020, Bitcoin capitalisation was worth roughly $169.9 billion.
Bitcoin can be stored in different crypto wallets. You can choose the so-called "hot wallets" (software applications), or "cold wallets" (special hardware devices). While hot wallets are considered more agile for exchanging crypto, cold wallets are viewed as a safer option to store your coins for a long period of time. In each case, Bitcoin wallets are secured cryptographically, and in order to transfer your BTC, you should have a "private key";.
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Bitcoin use cases
Bitcoin has become a strong alternative to traditional fiat currency, when it comes to digital payments. You can even buy a cup of your morning coffee with BTC.
Bitcoin price is always volatile, giving strong potential for speculation. BTC is the most popular cryptocurrency among traders, who trade and profit from Bitcoin price swings.
Store of Value
Bitcoin has proven to be a lucrative investment. According to Delphi Digital, in 2019 Bitcoin was labelled the “King of the Asset Class Hill” with 60 per cent growth in less than two months.
Bitcoin price chart: historical dataBitcoin price has undergone dramatic price swings since its inception.
When we talk about new bitcoins we usually say that they are “mined”. New bitcoins enter in circulation as block rewards, produced by “miners” who use expensive electronic equipment to earn or “mine” them. What does it mean?
‘Mining’ is a decentralised and competitive process that involves individuals who process blockchain transactions, secure the network and collect new bitcoins in exchange. Bitcoin protocol is developed in such a manner that new bitcoins are developed at a fixed rate, which makes mining a highly competitive business. Bitcoin mining does not presuppose any central authority.
New bitcoins are created at a predictably decreased rate. The number of newly created bitcoins is automatically halved over time until all the 21 million bitcoins are mined.
Bitcoin halving is the event, when every 210,000 blocks (approximately every 4 years) the total number of bitcoins that miners can get as a reward is halved. It means that the reward for mining new blocks is cut twice and miners will receive 50 per cent less for verifying Bitcoin transactions.
Having is important not only for miners, but also for traders and investors. Reducing the number of newly mined Bitcoins, halving limits the supply in new BTC. This could potentially cause an increase in bitcoin price in case if the demand keeps strong enough.
This has already happened during the two previous halvings, driving bitcoin price higher, however, each halving is different and you should carefully follow the crypto market news and analysts insights into bitcoin price after halving 2020 to catch the best bitcoin trading opportunities at Currency.com.
The first thing to remember is that the crypto market, including Bitcoin, is extremely volatile. Since its inception in 2009, Bitcoin has been experiencing wild price swings, bringing some investors big profits and making others bear huge losses.
The popularity of Bitcoin trades is constantly growing, providing immense opportunities for traders. It has become a strong alternative to traditional Forex markets and consolidated its position as the world's most valuable cryptocurrency.
Traders can always profit from Bitcoin price swings with us. You can either make short- or long- operations, depending on Bitcoin price movements, and benefit from the price difference. Follow the latest crypto market news and analyse the streaming Bitcoin live chart at Currency.com to spot the best BTC trading opportunities.
Both crypto and fiat currencies have two main features in common: they enable payments and are used as a store of value. However, the fiat currencies are backed by the central authority, while cryptocurrencies are based on the powerful underlying technology – blockchain.
Bitcoin has become a new form of trust for the future monetary system. The most revolutionary aspect of cryptocurrency is that anyone, anywhere at any time can spend or receive it without any bank or government authority involved.
While fiat currencies are subject to inflation and central banks can print more of them if needed, the number of Bitcoins is limited to 21 mln units, which makes it even scarcer than gold.